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Pay By Touch Cuts Biometric Services

The division could no longer be supported due to lack of funding, market conditions.

March 23, 2008, 08:00 pm

SAN FRANCISCO -- Solidus Networks Inc., a payment processing provider doing business as Pay By Touch, announced that it was immediately ceasing its biometric transaction processing for its merchant customers and consumer membership base just before midnight on March 20, according to a company news release.

Other nonbiometric business units provided by Solidus Networks will continue to operate as planned, according to the company.

Solidus Networks filed for U.S. bankruptcy protection under Chapter 11 on Dec. 14, 2007, the company stated. As part of Solidus Networks' restructuring, the company decided it could no longer support the biometric system as it currently exists, based on lack of funding and current market conditions, the company stated.

The shutdown caused financial analysts to question if biometric payments are ready for the market's mainstream, while others argued that the troubles stem from the company and its execution, as Japan sees millions of customers using fingerprint-based transactions via cell phones, the Chicago Tribune reported.

"Commercial biometrics is inevitable," Paul Saffo, a Silicon Valley-based trend forecaster, told the Tribune. "There are huge risks, but it's just so cheap and convenient, people won't be able to resist it. Whenever Americans face a choice between privacy and convenience, they always choose convenience."

Solidus Networks' first biometric payment transaction was in 2002.The Pay By Touch system launched in 204 Jewel and Jewel-Osco grocery stores in January 2006. By March 2006, nearly 10,000 shoppers had signed up for the service and the technology had also been rolled out at Cub Food stores in Illinois, the newspaper reported.

"We found there was a slow but steady acceptance by customers," Jewel spokesman Miguel Alba told the Tribune.

Stores were slow to install biometric equipment because of other priorities taking precedence, Gale Daikoku, research director for Gartner Inc.'s retail technology practice, told the newspaper. "While payment is important, it's not the top priority," she said, noting that having items in stock is most important. "There are lots of things retailers could invest in before you even get to building a business case for biometric payment."